U’khand’s first MSME policy: Incentives galore

The Uttarakhand government has notified its first micro, small and medium enterprise (MSME) policy, which aims to boost entrepreneurship, end outward migration and bring about inclusive development in the state, especially in the remote and flood-hit hill areas.

The policy offers several incentives like capital investment subsidy, interest subsidy and VAT reimbursement, said Sudhir Nautiyal, additional director, department of MSME. It will remain in force until March 31, 2020, though the incentives can be availed of until March 31, 2025.

The government has set a target of inspiring 1,000 youths to become entrepreneurs every year. It has also set up two mini textile parks – at Munsiyari in Pithoragarh district and Bhimtalla in Chamoli district.

A POSITIVE PLAN

Offers incentives like capital investment subsidy, interest subsidy and VAT reimbursement
Will remain in force until March 31, 2020; incentives can be availed of until March 31, 2025.
Government has set a target of inspiring 1,000 youths to become entrepreneurs every year.
Thrust will be on skill development and creating new infrastructure
Potential sectors for MSME development: agro-based food processing and allied industry, handloom, hosiery, khadi and so on

The thrust will be on skill development and creation of new infrastructure such as mini tool rooms and flatted factories. Potential sectors identified for MSME development include agro-based food processing and allied industry, handloom, hosiery, textiles, pharma, khadi and village industry, floriculture, tourism, herbal and medicinal plants.

The state has been divided into four major categories. Remote districts like Pithoragarh, Bageshwar, Rudraprayag, Champawat, Chamoli and Uttarkashi have been included in category A, where the capital investment subsidy will be 40 per cent.

The subsidy will be 35 per cent in category B districts such as Pauri, Tehri, Almora and the hill areas of Dehradun and Nainital districts. In category C areas – Raipur, Sahaspur, Vikasnagar, Ramnagar, the Doiwala area of Dehradun and the Haldwani area of Nainital district – the capital investment subsidy will be 30 per cent. In category D, comprising the whole of Haridwar and Udham Singh Nagar districts, it will be 15 per cent.

Interest subsidy will be available at 10 per cent, eight per cent and six per cent in categories A, B and C respectively. There will be no interest subsidy in category D. The new policy also envisages a power subsidy.

MSMEs will be entitled to full VAT reimbursement in the first five years after production commences in category A, and 90 per cent after the first five years. Full VAT reimbursement will also be available for the first five years in category B, and 75 per cent after that. There will be no VAT incentive in categories C and D.

The government will not levy any stamp duty in categories A, B and C. In category D, stamp duty will be at just 50 per cent. The government will also provide all support for the cluster development schemes of the Central government and set up mini tool rooms.

A land bank is to be developed, and land will be provided to MSMEs at concessional rates. The government will also develop 100 mini industrial estates. At least 25 per cent of the area in the industrial estates developed by the State Infrastructure and Industrial Development Corporation of Uttarakhand Limited (Sidcul) will be reserved for MSMEs. An infrastructure development fund will also be created.

An empowered committee headed by the chief minister is being set up to monitor the implementation of the policy.

The policy was prepared by the department of MSME and the Industries Association of Uttarakhand (IAU, an industrial chamber mainly comprising MSMEs) by incorporating suggestions from the Confederation of Indian Industry. “Through this policy, we are hopeful that a new beginning will be made by the government as far as MSMEs are concerned in Uttarakhand,” said Pankaj Gupta, president of the IAU.